Industry Sales Stalling in Q4 — Pensions A-Day impetus, structural change in
corporate pensions and a bull market lifted sales by 26% in 2006. In 2007 growth
slowed to 14% on our estimates. Asset accumulation products led the way in 2006
(+33%) and 2007 (+15%) but are now flat (Q4 +1%). Risk products, particularly
annuities, are now taking up the running (2006: +5%, 2007: +11%, 4Q07: +37%).
 Asset Accumulation Slowdown Has Silver Lining — Lump sum bonds have been
hit by potential CGT changes and loss of retail confidence in markets. In retail
pensions (SIPPs especially), the slow down in new business in part reflects a
return to normality in 'transfer' sales (churn!) in 2H07. This should show through
in a more normal level of lapse – in line with assumptions.
 BPA Market Fires Up — Protection is a sluggish market and individual annuities
are growing nicely. The excitement lies in BPAs where the long awaited pipeline of
£835 billion of DB assets is now translating into real business. With 27% of
companies wanting to offload their liabilities, there is demand (albeit subject to
market conditions) and supply is limited – with L&G and Paternoster centre stage.
 Sales Reporting Season — L&G and SJP have reported, signalling the Q4
slowdown. With the others reporting in the next two week, focus will be on the
2008 outlook, with our central case being a 1% fall for the industry.
 In the Spotlight — Storebrand has been exceptionally weak YTD. We examine the
exposure of its capital structure to equity market moves and argue this is robust
and its equity exposure unexceptional, implying that technical factors have been
far more important driving underperformance. Trading on just 77% of EV, this
looks like an attractive entry point for long-term investors.